Hong Kong family offices turn attention to India, following global trend towards ‘prime destination for investment’

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  • Analysts consider India a promising growth story, with significant economic expansion and an influx of capital into equities and fixed-income
  • ‘India is the next big domestic demand story for the next 25 to 30 years,’ fund manager says

As China grapples with economic challenges, a growing number of Hong Kong family offices are following the global trend of diversifying their investments by turning their attention to India.

Their decisions come as analysts and global investors consider India a promising growth story in Asia, with expectations of significant economic expansion in the coming years and an influx of capital into equities and fixed income.

“We have been very optimistic about India’s potential and view it as an additional strategic market alongside China,” said William Chow, deputy group CEO of Hong Kong-based multi-family office Raffles Family Office. “We believe that India is a prime destination for investment. We adopt a dynamic investment approach whereby currently the firm has around 10 to 15 percent of Indian exposure in our portfolio through stocks and [exchange traded funds].”

India’s stock market capitalisation surpassed Hong Kong’s for the first time on January 23, reaching US$4.33 trillion compared with Hong Kong’s US$4.29 trillion, making it the fourth-largest stock market in the world.

Despite a short-term consolidation following a rally, analysts anticipate a positive outlook on the back of the country’s strong economy.

Global rating agency Moody’s recently raised India’s GDP growth projection for 2024 to 6.8 percent from 6.1 percent after the country reported stronger-than-expected data in 2023. Led by strong manufacturing and construction activity, India’s GDP posted 8.4 percent growth in the quarter ended December.

Another ratings agency, S&P Global Ratings, predicts India, currently the world’s fifth-largest economy, will overtake Japan and Germany to become the third-largest economy by 2030.

Kalpen Parekh, CEO of India-based DSP Mutual Fund, has observed growing investment interest from Hong Kong investors. During a recent visit to Hong Kong, he had 18 to 20 meetings with local family offices and wealth-management companies with clients who are looking to invest in India.

“Our dialogues keep going on,” he said. “So at some point in time, we will be able to manage money for them.”

DSP Mutual is a fund firm backed by DSP Group, one of India’s oldest financial services firms, which began as a stock brokerage in the 1860s.

However, investing in India’s stock market presents some challenges, said Marcus Wong, vice-chairman of Hong Kong-based family office WRise Wealth Management.

It can be difficult to value Indian companies using traditional methods, as the market has different metrics, Wong said.

While equities pose challenges, clients are also exploring investment opportunities in commercial properties due to India’s booming economy, Wong said.

Investors “really have to dig deep” during the due diligence process, “not only on the numbers and the business itself, but also you have to get to know the culture and religion as well” because these are influential factors in India, he said.

Parekh of DSP Group said India is “democratic and meritocratic”, and long-term shareholders have been rewarded.

“Indian companies and entrepreneurs have delivered 12 percent profit growth rates over three decades,” he said. “India is the next big domestic demand story for the next 25 to 30 years.”

Christopher Wood, global head of equity strategy at Jefferies, who is also optimistic about the Indian market, has highlighted the potential growth of the Indian real estate sector due to pent-up demand.

In an investment report he publishes, Greed & Fear, Wood said that the potential upside in Indian residential property as a secular theme, compares with where China was in 2005. What happened there in the subsequent years could happen in India, Indian publication Business Today cited Wood’s report as saying.
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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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